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The true source of innovation in federal IT

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There has been much discussion about the lack of technological innovation in the federal IT market. Steve Kelman, former administrator of the Office of Federal Procurement Policy, has been blogging on FCW's "The Lectern" about this very issue, with his focus seeming to be that industry, rather than government, is the problem.

With that in mind, I'd like to offer the notion that a major part of the IT industry seems to be missing from the conversation.

Quoting Kelman from his blog: "I asked my source what he would do about this problem if he were newly appointed as CEO to a big government IT contractor [emphasis added].

Therein lies one of the primary reasons why the federal government continues to struggle to find innovative, cutting-edge solutions to technology and modernization issues. Government officials believe -- incorrectly, in my opinion -- that innovation will come from large IT contractors.

To be sure, there is plenty of blame to go around for both private-sector and government decision-makers. However, barely any commentary even hints at what is really happening behind the scenes.

Let's start with where real innovation is occurring in the federal market: small businesses. And that means the small-business community is an important key to fixing federal IT.

As Kelman and his colleagues point out in their discussions on the blog, the federal market is dominated by large firms that tend to focus less on research and development and more on bidding on federal IT requirements outlined in agencies' requests for proposals. That activity is a direct response to market forces created by the federal government. Many of the comments on the blogs discuss that trend as well.

Furthermore, many comments on the blog and "The Lectern" blog itself discuss the culture of risk aversion in government. That culture prefers the status quo of bidding IT work requirements that are nothing more than the upkeep of status quo legacy systems, which are currently being serviced by the same large federal IT government contractors. The contracts add up to billions of dollars, but few to none of them seek cutting-edge solutions, innovative technologies or any real change in the federal IT services market.

Although most large federal IT contractors claim they are the leaders in certain technology sectors where innovation is occurring (e.g., agile, cyber and cloud), those statement are not valid. The market is not mature enough in those areas to justify such claims, but the firms continue to reap the rewards of their marketing and lobbying efforts. And the government continues its consolidation of the market through its desire to use large contract vehicles (e.g., strategic sourcing and governmentwide acquisition contracts). They are causing serious damage to the small-business industrial base as a result.

Adding insult to injury is the continuous march to Silicon Valley, where the Pentagon and other agencies are begging commercial IT start-ups and investment firms to save the government from itself and help move it into the 21st century of technology. The creation of the Defense Innovation Unit Experimental and the ongoing shunning of small businesses that are attempting to compete for government contracts continue to drain resources, thereby preventing progress and innovation.

Silicon Valley is hesitant to work with the federal government for many reasons, yet federal agencies can't take no for an answer. New DIUx centers continue to open across the nation.

Furthermore, contractors now have to deal with more competition from the federal government itself through the likes of the U.S. Digital Service and the 18F program at the General Services Administration. I certainly applaud those efforts, but I believe the programs have raised enough concerns about poor financial management, security breaches and overall program management failures to warrant a thorough review of their efficacy by the next administration.

At the same time, many small businesses in and around Washington are exclusively focused on creating innovative, cutting-edge technologies for the federal government but have little access to capital, contracting opportunities, federal buyers or the leverage that large firms enjoy. Even more challenging, executives of large federal contractors actively lobby for nothing short of the elimination of small-business programs altogether as "acquisition reform."

Refocus is in order to help alleviate the problem with innovation, or lack thereof, in the federal market. It begins with acknowledging the problem and considering all the possible solutions to it. The federal government would be wise to look beyond the curtain of large IT contractors and see the world of possibilities that the small-business community offers to solving some of our pressing technological problems.

About the Author

Jaime Gracia is president and CEO of Seville Government Consulting, a federal acquisition and program management consulting firm.

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Reader comments

Mon, Oct 3, 2016 Jaime Gracia

Stating that small businesses tend to be nimbler, better able to adapt to markets, and overall faster to innovate is neither naïve, nor self-serving. The comment effectively makes the case for the article, that the government would we better served by lowering the barriers to entry, and making the entire procurement and management process more flexible to allow more innovative solutions, which tend to come from small businesses.

Mon, Oct 3, 2016 Jaime Gracia

That is part of the problem identified by Dr. Kelman, in which contractors respond to RFPs, and the government does not actually try and research requirements from an innovative standpoint. There is too much of a focus on just keeping the light on.

Thu, Sep 29, 2016

Unfortunately, this article is a self-serving pile of rubbish that fails to recognize the breadth of the challenge while naively suggesting that SBs are the answer. Companies both small and large will invest to innovate whenever the business case indicates that investment will deliver an appropriate return. The Government market brings major disincentives to innovate as the Silicon Valley SB start-ups will attest. Until the Government changes expectations related to Intellectual Property ownership and fair profit margins, companies of all sizes will look elsewhere to invest their capital. And, as long as the Government releases RFPs with the same old IT operations and sustainment requirements focused on maintaining legacy systems, companies will be forced to submit proposals that reflect those old requirements, both in approach and innovation, as well as the corresponding price.

Wed, Sep 28, 2016 Mark Nelson Washington DC

Nice article, but to be fair to the large contractors, many of them are locked into large contracts and staffing commitments that cannot be easily modified to accommodate the change that is key to innovation. Government needs to do a better job segregating ongoing operations support from friend of government type work that promotes integration. There are too many situation where there is a conflict of interest.

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